QUESTION 1

True or False? You should include interest payments when calculating a project's cash flow.

True

False

2.5 points

QUESTION 2

The profitability index is useful under:

	A.	Capital rationing
	B.	Mutually exclusive projects
	C.	Non-normal projects
	D.	None of the above

2.5 points

QUESTION 3

True or False? The Net present value generally is found by subtracting the required investment from the present value of future cash flows.

True

False

2.5 points

QUESTION 4

True or False? Assume that you are considering two mutually-exclusive projects that have different lives. The projects are all-cost projects (i.e., do not generate revenues or savings of cash but involve necessary equipment). One appropriate way to choose between the projects is to select the project with the lowest equivalent annual cost (EAC).

True

False

2.5 points

QUESTION 5

True or False? When calculating net present value, sunk costs should not be included as they have no future cost.

True

False

2.5 points

QUESTION 6

Net working capital should be considered in project cash flows because:

	A.	They are sunk costs
	B.	Firms must invest cash in short-term assets to produce finished goods
	C.	Firms need positive NPV projects for investment
	D.	None of the above

2.5 points

QUESTION 7

Life cycle costing is a method for estimating the cost of a capital project that reflects total costs, both operating and capital over the projects estimated useful life.

True

False

2.5 points

QUESTION 8

The capital decision making process in the healthcare industry is complex.

True

False

2.5 points

QUESTION 9

A Capital investment decision designed to increase the operational capability of a health care organization is called:

		Strategic Decision
		Operational Decision
		Replacement Decision
		Expansion Decision

2.5 points

QUESTION 10

The three discounted cash flow methods are; Net Present Value, Profitability Index and Equivalent annual cost.

True

False